Rephrase the title:UPL shares hit 52 week low after 9% slump

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New Delhi, UPL was among the top Nifty losers as the shares slumped more than 9 per cent on Monday after its operating performance missed expectations.

UPL shares were trading at Rs 482.85 down 9.8 per cent. The lower circuit is at 10 per cent. UPL shares hit a 52 week low on Monday. The company has a market capitalisation of Rs 36,735.31 crore.

Motilal Oswal Financial Services said in a report that UPL reported another weak quarter, with a 28 per cent YoY decline in revenue. It was primarily attributed to a continued downtrend in agrochemical prices (down 24 per cent YoY), leading to continued destocking of inventory distributors (volumes down 5 per cent YoY). All regions (except RoW) witnessed a sales decline of at least 20 per cent (India) to as high as 64 per cent (North America). RoW sales grew 12 per cent YoY.

Gross debt (excluding perpetual bonds) increased to Rs 361.7b as of Dec’23 from Rs 328b as of Dec’22. Net debt (excluding perpetual bonds) increased to Rs 313.5b as of Dec’23 from Rs 275.3b as of Dec’22. Factoring in UPLL‘s subdued performance in 3QFY24, we cut our FY25E/FY26E EPS 23 per cent/11 per cent, the report said.

“We see near-term challenges in the global agrochemical industry due to: a) the accumulation of high inventory as distributors opt for need-based tactical purchases, and b) declining agrochemical prices led aggressive price competition from Chinese (post-patent) exporters. Considering the short-term challenges, cash flow generation and debt repayments remain the key monitorables,” the report said.

UPLL expects 4QFY24 to be weaker YoY; however, it expects margin improvement QoQ. The management expects normalized business performance in 2QFY25.

The management expects the price challenge to continue in the near term. UPLL is witnessing a pick-up in volumes in Latin America and double-digit growth in revenue in the RoW region, the report said.

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